Stephanie Link: Inside the Capital One Conference

Its conference season in New York and one presentation that I attended was Capital One.

NEW YORK (TheStreet) -- Its conference season in New York and one presentation that I attended was Capital One (COF). I've admired the turnaround that management has overseen since the financial crisis and I was impressed with the commentary. We own and like several financials in Action Alerts PLUS, including Bank of America (BAC), JPMorgan Chase (JPM), SunTrust (STI), U.S. Bancorp (USB) and Hartford Financial (HIG). And we've been eyeing American Express (AXP) for a few weeks but it's moved away from us, unfortunately. But another one I am watching is COF; if there is a pullback, it's worth owning.

Today, we saw another round of encouraging data: Durable Goods rose 0.8%, Core Capital Goods Shipments were revised higher in March at 2.1% (this measures business investment), the 20-city S&P/Case-Shiller Housing Index posted a 12.4% increase to home prices over last year, and FHFA house prices improved 6.5% nationally. All of the figures beat consensus and were encouraging incremental news after the spate of softer data in the weather-impacted first quarter.

On the flip side, inventories were adjusted downward and it now looks like first-quarter GDP will be down 0.5% to 1%. But the catch-up trends look to be strong and second-quarter expectations are now at 3% to 4%. Again, some of it is pent-up demand from weather, but I believe we are at an underlying trend at 2% to 2.5% GDP that should see an acceleration into the end of the year. I like the industrials and financials given that they've lagged the broader average to date and have the most leverage in this environment. A stronger economy will put an upward bias on bond yields, produce stronger loan growth and better profitability (as measured by net interest margins).